Topic 1.5 Understanding external influences on business Flashcards
Who are business stake holders?
Shareholders employees customers local community pressure groups the government
How are stakeholders affected by business activity?
Shareholders - wants profits
pressure groups - wan to influence business decisions and action
employees - wants a good pay and working conditions
customers - want value for their money
government - low employment
What is a possible conflict between stake holders?
One possible conflict between stakeholders such as pressure groups can be the business unethical decisions. This means that, business is at risk of having a bad brand image. Therefore, can lead to a fall in sales due to boycotting.
What are the different types of technology that a business can use?
e-commerce
social media
digital communication
payment systems
how can technology effect the business cost?
Can be a huge investment but long term can reduce cost and increase efficiency
How can technology effect the business sales ?
innovated products can increase demand from customers and increase sales
How can technology effect the business marketing mix?
product - make it innovated
price - can be expensive
place - e-commerce
promotion - can increase demand for product
What are the principle of consumer rights?
- goods/services must be as described
- Good/services must be an appropriate quality
- goods/services must be of an appropriate safety
What are the principles of employment law
Healthy and safety
being fair during recruitment
not discriminating against others
What is the example of the law for consumers?
The consumer right act 2013
What is the example of employment law?
Health and safety act
equality act
national minimum wage
What is the advantage and disadvantage of following consumer law?
advan:
good brand image (if they follow)
increases customer loyalty
improve relationship with stakeholders
disadvan:
business have to keep up to date with law
can be costly
consumers can take legal action against the business
What is the advantage and disadvantage of employment law?
advan:
employees may be happier and more motivated
reduces recruitment cost
disadvan:
meeting health and safety can be costly
not following it can lead to unhappy employees
What is the impact of unemployment ? (increase+decrease)
INCREASE:
pay lower wages
reduces cost
apply for grant
consumers have a lower disposable income meaning that the business sales are lower
DECREASE:
consumers have a higher disposable income but they is smaller workforce
What is inflation?
When the cost of living /food/housing and other products increases.
What is the impact of inflation?
Business:
can cause the business cost to increase
Consumer:
have less disposable income and therefore are less likely to buy the business products and service.
What is the impact of raising interest rate?
business - may struggle to repay loans
small business- are less likely to borrow to start up or expand
consumers - Are less likely to spend money as consumer disposable money decrease.
What is the impact of falling interest rate?
business - will have more money to spend and cash flow will improve
small business - will borrow money to start up or expand
customers - are more likely to spend their money and their spending will increase.
The effect of a fall in the value of the pound
Goods for UK exporters of good - price of exports falls - sales increase
good for UK tourism - prices are cheaper to foreigners - tourism increases
Good for UK businesses - imports more expensive - people buy more UK goods
Bad for UK importers of materials - imports more expensive - cost raise
the effect of a raise in the value of the pound
Bad for UK exporters of goods - price of exports rises - sales fall
Bad for UK tourism - Prices more expensive to foreigners - tourism falls
Bad for UK business - imports cheaper - people buy fewer UK goods
Good for UK importers of materials - imports cheaper - cost falls
opportunities of external influences
- rise in economic activity - increase in demand
- new legislation increases demand for business’s safety products
- new technology
- lower interest rates makes it easier for the business to borrow money
Threats of external influences
new competitors
new legislation that makes the product illegal
fall in economic activity (fall in demand)
new technology can make the business product obsolete
what are the responses to external influences?
change company policy
lower prices
increase productivity
cut investment
